RBI cuts repo rate by 0.25% to 7.25%; leaves CRR unchanged

The Reserve Bank of India on May 3, 2013 cut its key repo rate by 25 basis points to 7.25 per cent.

But the Cash Reserve Ratio or the portion of deposits that banks park with RBI (without any compensation) remains unchanged at 4 per cent.

In its Macroeconomic and Monetary Developments report, released on the eve of the policy, RBI had sounded quite hawkish and reiterated that there was limited space for monetary policy action in the coming days.

Decoded, that meant no rate cuts for now. Instead, RBI was probably keeping the markets guessing by saying that a “policy recalibration’’ could happen in either direction — which meant even a hike — if local and overseas conditions warranted it.